balancing your personal budget

How to Find ‘New Money’ in Your Budget (Financial Advisor in Jersey Shares 7 Tips)

Do you ever feel like you don’t have enough money left at the end of the month? Believe it or not, even high net worth individuals often feel like there’s not enough to put toward their savings goals, debts and hobbies.

The solution: Revisiting your budget! Really!

Former Patriot Rob Gronkowski, actress Kristen Bell and even Grammy award-winner Carrie Underwood are known to stay on a budget, making statements like, “I have the money now, but will it last forever? You never know.”

As a financial advisor in New Jersey, I tell clients about seven ways they can find “new money” in their budgets. These tips are designed to help find wiggle room in your budget, no matter your income, so you can strive to ensure every dollar is helping you accomplish your dreams. There’s no better time than now to make better financial habits, as we use the Coronavirus pandemic as a catalyst for change.

Tip #1: Review Your Budget

The first tip is pretty straightforward, yet very commonly overlooked. People don’t want to admit failure or feel restricted. But the truth is, you can’t know how much money you have to work with each month if you’re not tracking it.

If you already have a budget, congratulations! You’re on the right track. Make sure to review it at least once a month to see if there are any areas where you’re overspending.

For example, a common issue I see is, you may set aside $400 for groceries every month because you think that’s what you should spend. But after crunching the numbers, you learn that you’ve spent $475 on average the past three months.

In this case, you have two options:

  1. You can stop the wishful thinking, admit that your family does spend $475 a month on groceries, and start budgeting that much from here on out.
  2. You can look for ways to decrease your spending.

Go through each row of your budget using this method until it reflects your true expenses.

Don’t Have a Budget Yet?

If you don’t have a budget yet, now is the time to set one up. While most people think the opposite, budgeting can be complicated the more money you have, especially if that money isn’t guaranteed for life, like with professional athletes or business owners. Are you budgeting enough in your savings, toward your investments, in an emergency fund?

Thanks to today’s digital age, there are dozens of apps out there that will help you track your income and expenses without doing much work on your part. Some apps even sync up with your financial accounts to import and categorize transactions as you make them. There are also features that can track your assets, debts, and net worth, giving you the ultimate birds-eye view of your finances. But a financial advisor can help you see your full financial picture and create a comprehensive financial plan that works for you.

According to reports, ultra-high-net-worth individuals underestimate their spending by 25 percent on average – and sometimes by as much as 50 percent. Don’t be afraid to seek help.

Tip #2: Weed Out ‘Extra’ Expenses You Don’t Need or Enjoy

One of the simplest ways to find “new money” in your budget is to cut out any extra expenses you don’t use or enjoy.

As a financial advisor in Jersey, when I sit down with clients, I often find they’re still paying for old gym memberships they haven’t used since their kids moved out. Or they’re paying for a Disney+ membership they’ve only used once in the past year.

These small purchases may not seem like much, but they can silently drain your budget.

Yes, you can keep that $5 coffee if it makes you happy, but cutting out expenses you don’t care about is an effortless way to free up money in your budget without feeling like you’re giving something up. It’s a win-win.

Tip #3: Trim Your Bills

Once you’ve trimmed down your “extra” expenses, take a look at your bills. (Think insurance, cable, Internet, phone bills, food bills, etc.) Are there any you could reduce?

Here are four examples of how you can easily trim down your food bill:

  • Make a grocery list before you go to the store (and stick to it)
  • Limit your shopping trips to once a week
  • Buy in bulk only if you need a lot of something (if not, you could be overspending on what eventually becomes waste)
  • Make sure to buy a few “easy” things you can fall back on when you don’t feel like sticking to your original meal plan (a fallback item is often cheaper that dining out)

To lower other bills, such as insurance, shop around for better rates and talk to your financial advisor about what coverage you really need. Read our recent blog post: Foran Financial Group Reviews POAs, Health Directives and Insurance. (Foran Financial Group and LPL Financial do not provide legal advice or services. Please consult your legal advisor regarding your specific situation.)

Tip #4: Separate ‘Fun Money’ From ‘Bill Money’

When you’re not budgeting, it’s easy to think you have enough money to buy something if there’s enough money in your checking account to cover it. (I’m guilty of this myself!) But that money is most likely already earmarked for bills and other expenses.

Separating “fun money” from “bill money” can help you make sure you have enough to pay your bills in full each month.

There are a few easy ways you can do this.

  1. If you’re using a budgeting app, use the tools to allocate enough to cover your bills and highlight money that’s already assigned to something.
  2. Use two separate checking accounts: One for bills and one for spending.

Tip #5: Prioritize Saving

Get in the habit of saving by treating every financial goal like a monthly bill.

For example, if your goal is to invest $500 a month in your Roth IRA, create a line item in your budget for it. When you’re filling in your budget for the month, treat your Roth IRA like a non-negotiable expense. Set aside $500 in that category first, then use the rest to cover mandatory and discretionary expenses.

Tip #6: Boost Your Income

Another way to find “extra money” in your budget is to boost your income. You don’t necessarily have to find a new job, but you could:

  • Sell used items
  • Ask for a raise
  • Start a side-hustle, like crafts, cooking or sewing
  • Rent out a spare bedroom
  • Pet sit or house-sit for your neighbors when they go out of town

Another way is to cut out your debt!

Want to have more money to spend? Work on paying off any high-interest credit-card debt, your car or school loan, and even your mortgage. Paying interest is essentially taking money from your future, because not only do you have less to spend in the short-term, but you have less that is working for you, lessening your earning potential for your future.

Tip #7: Save Any ‘Bonus’ Money Throughout the Year

Last but not least, you can find new money in your budget by saving any “bonus” funds you get throughout the year. This could include:

  • Tax refunds
  • Property tax refunds
  • Stimulus checks
  • Birthday or holiday money
  • One-time bonuses or overtime pay from work

If you don’t have a plan for how you’ll spend this “bonus” money, you may end up blowing it on frivolous purchases instead. Avoid this trap by promising yourself you’ll set aside some (or all) of it for your debts, savings, and financial goals. Talk to your financial advisor about how to make this money work best for you, from investing options, debt pay-off solutions or boosting your emergency fund.

The First Step: Get Started!

These are just a handful of ways I help clients find new money in their budgets. If you’d like to discuss even more ways, or if you need help implementing some of these tips, Foran Financial Group is here to help.

As a financial advisor in Jersey, I am truly dedicated to helping clients accomplish their financial goals and enjoy less stress as they journey toward retirement.

Take the first step and schedule a no-obligation conversation with our team. A simple conversation can go a long way.


Foran - Get Retirement Ready eBook

Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

The financial professionals associated with Foran Financial Group may discuss and/or transact business only with residents of the states in which they are properly registered or licensed. No offers may be made or accepted from any resident of any other state.